SPX Monthly Chart Overbot Rising Wedge Negative Divergence QE Money Pumps Create Asset Bubbles Central Banker Actions Result in Reverse Fibonacci Sequence

SPX monthly chart receives a new print today as February ends. The SPX is down only one month in the last nine months. The five major central banker QE money pumps are shown, each resulting in a market top.  "Don't Fight the Fed" is always true--until it isn't. QE1 ran out of gas in the spring of 2010, QE2 petered out in spring 2011, the Operation Twist and ECB's LTRO 1 and 2 all ran out of gas last springtime, about one year ago. This was the first blatantly coordinated central banker action in economic history as the Fed's Bernanke and ECB's Draghi saved the markets after the August 2011 waterfall crash.  Last July 2012, Draghi said he would save the day "by all means necessary" so he pumped with the OMT program and the Fed chimed in with QE3.  That provided the lift into the September-October top.  Then the Fed throws the kitchen sink at the mess with QE4 Infinty and Beyond replacing Operation Twist with stronger fire power, and that creates the December-January-February run higher. Here we sit.

Note the reverse Fibonacci Sequence 13, 8, 5, 3, 2, 1, 1.  The central bankers plan to manipulate markets but perhaps the laws of nature will win out in the end as they always do.  QE1 lasted 13 months, QE2 8 months, etc...   From mid-December last year to now is the 2-month number in the sequence. The bitter end is approaching. The Fib's are at the roots at a one integer number now, so, a top is expected now, then any additional Fed pumps may only have a one month affect and the Piper will likely have to be paid now. Note the textbook rising wedge in red, a bearish pattern.  The red lines show the negative divergence in place that wants a smack down and the collapses out of rising wedges can prove quite dramatic. The green lines for the RSI and MACD line show how the bulls want to squeeze as much life out of this puppy as possible so two potential paths are provided. The brown arrow simply says the downside starts at anytime and we start to explore lower numbers. The teal arrow shows a down March but a recovery to satisfy the green lines for the indicators, and bring price back to the apex of the wedge, which is the 1550-ish that many technicians are looking for, then collapse. Any way you add it up, the Fat Lady is beginning to sing. This information is for educational and entertainment purposes only.  Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.